Video

The Monty Hall paradox and risk management

[info]cheis  reminded about The Monti Hall paradox. (video)

if ugly then
1) you have three doors to choose from, there is a prize behind one of the doors.
2) you make a choice – probability of getting a prize = 1/3
3) after you have made a choice (but none of the doors are open yet) they open the door for you, behind which there is definitely no prize and ask, do you want to change your choice now.
4) it is obvious that now there are only two doors in front of you and the probability of receiving a prize is now 1/2, which is higher than 1/3. (simplifying a little, in the language of probability it will be prettier)

this whole thing is called a paradox because, what most people think, that an open door does not carry additional information, so there is no point in changing the choice. in terms of probabilities – the choice needs to be changed, because 1/2 this is better, how 1/3.

in fact, it's a paradox of a paradox.
in real conditions two choices 1 door from 3, and than 1 door from 2 – are independent. since the choice is made randomly in principle, so it is correct to run your random generator again and point to one of the two remaining doors randomly (if you point to the same, as for the first time – then you don't change the choice, if on another – then change). thus, the formation of the problem conditions leads to a composition error and we focus on formulas instead of reality;)

ie. you make two independent choices, therefore, asking the question `` to change or not to change the decision" leads to an erroneous perception of reality.  if anyone knows empirical experiments – share, sure, that the result will be unexpected. can it be like this: the strategy of randomly choosing one of the two doors will outperform the strategy of constantly choosing a `` new door ''.

economists and quanta love to fall for such things. the most striking example of the discrepancy between theory and reality (of those at hand) described by William Feller flipping a coin (popularization from Mandelbrot).

we toss a coin. if the eagle – we write +1 dollars, tail – minus dollar. tossing results are summed up. on shorts (sorry for the quality, photo by phone page from the naughty marketplace" Mandelbrot) third graph – this is the result after 10000 tossing. On the top chart – First 500, second from 500 to 5000.

as we see, if we bet on, that in the long run, our result will tend to zero (what in theory) we may face a situation where market tossing `` goes against us ''. this is where LTCM flew. managers believed, that the spreads will converge. and the spreads converged in the end. but these 'deviations from zero" proved to be sufficient, to knock LTCM out of the saddle.

the practical conclusion is – what is risk management – is the ability to make a decision about, that it's time to change the principle of decision making. for example LTCM – fix losses having felt, that the situation is out of control.

all in all, no one is going anywhere from the need to make decisions on their own.  

update.

with the independence of choice in Monty Hall, I seem to be too clever. apparently I was not able to express the idea concretely enough, so the criticism fell on, which is so clear. but, from the choice of 1 out of 2, you can go to the choice of 1 out of 3 and do the same algorithm as in Monty Hole. then the treated probability 2/3 will be higher than the initial probability 1/2 at the initial choice of 1 of them 2. ie. the math trick itself is universally applicable. although it is not known at the practical level whether the strategy of Monty-Hall will outplay the strategy of 2 equal random choices (because of, what is critical is the random distribution of the position of the prize and the door in repeated experiments).

Again, that I did not dispute and do not dispute the validity of the paradox. I thought, what is the focus in specific conditions, but he's in mathematical logic, which consists in reducing the unknown. and, the more we reduce the initial probability (for example, turning choice 1 from 2 to choose 1 from the 10th) the greater the statistical advantage we get when we change the choice.

so i was wrong,
but the fact that I was not shown an error is a consequence of the poor-quality formulation of my idea.

Scammer (Rogue trader) 1999

A large and highly respected bank "Barings" hired Nick Leeson, young smart specialist. To solve all problems in one fell swoop, he was tasked with taking care of asset accounting and trading on the exchange at the same time., blinded by the first successes and fabulous earnings, Nick makes some serious mistakes, losing huge sums. Eager to hide your failure, savvy banker comes up with a clever scam, which draws him deeper and deeper into the quagmire ...

Film Pi (Pi) 1998 year

The talented mathematician Max Cohen has been trying for many years to find and decipher the universal digital code., according to which the rates of all stock exchange shares change. As we get closer to the answer, the world around Max turns into a dark nightmare: haunted by powerful Wall Street analysts and violent fanatics from a secret religious sect, ready to kill, to discover the code of the universal universe in their ancient sacred texts. On the brink of insanity, Max must make a decisive choice between order and chaos., holiness and devilry, wisdom and ignorance and decide, is he able to cope with a powerful force, awakened by his genius mind.

another belt transmission

Friday broadcast 11 June, second half of the session
on TV today:
1. CSIQ shorts
2. SLT long situation
3. FAF meeting of the seller and the buyer with a distance of 2c
4. SLRC analysis of a large seller at 2-day resistance

all by tape, with my comments. it turned out a weighty video at 520mb – air hour.
half a day looking for adequate video hosting, who would have missed such a size.

Click to play
hint: double click on video for fullscreen

download: http://blip.tv/file/get/Mimic1822-SLTCSIQFAF343.wmv

three bond videos

surely many people know, that in May the issuance of debt obligations with fixed income was perhaps not very impressive. markets are closed, no demand, our suggestions, as a result – no activity. the dynamics of the release of obligations is in this short overview video.

but in the USA, due to the decline in Treasury rates, large companies can afford to borrow long-term money at record low interest rates.

Yes, and a lot has been written about that, how the markets consider the debt of the same McDonald's to be more reliable than the US debt. moot point, but not so common, to draw conclusions. but in Europe it turned out a little more funny due to the massive nature of the phenomenon. at the end of the video, the most common logic is described. it is now that some companies seem to be more reliable due to more stable cash flow. but if problems start, funding will close for everyone, but only the government can raise taxes, print money and in, Eventually, only he has an army:).


By the way, remember the situation with GE. according to Paulson and Lowenstein (it might have seemed about the second), then at GE they just yelled at 2008 about that, that they have no access to funds, because comicshall pipers froze, and as they asked (OK, insisted) do something to help them, bypassing that, that they are not a finance company.

and since such a dance,
separation of proprietary and banking business gives nothing to anyone, for the 'real economy" which everyone cries about (especially with us)), financed on the market, not in the bank. maybe the situation will change in part, but what money market funds, what commercial IOU, all this will remain.

china-india-auto-real estate

Foxconn to scrap ‘factory town’ model. if you don't know, then the old model – this is the city around the factory. (great video). time to be flexible, how real it is probably no one knows, but everything starts now.

A 44 percent drop was seen in May compared with April in the total areas of property sold in over 30 major Chinese cities, according to figures from Century 21 China Real Estate. …. "Because of recent property policies that make buyers and even developers adopt a wait-and-see attitude, and as markets adjust to these policies, such drops will recover," Chen added. this is just a wait and see attitude) market cooling policy works, let's see what happens as the consequences.

Indian police disperse Hyundai sit-in strikers. India also strikes at car factories. There, however, the requirements are more philosophical, but still.

and do not forget about the movement around the IPO of an agricultural Chinese bank. Enough capital raising is planned for this year, because the last year has significantly reduced the available capital. The timing is unfortunate, attraction may be insufficient, and then NPL will grow, and then they still remember, how is it going))

Dick Hoyt's story

Everytime, when you lose heart and you think about, what may be that what you are doing is not for you, or you are not able to do it, remember the story of Dick Hoyt. He had to overcome hundreds of times more, than many of us have to overcome on the way to their dreams. Eighty-five times he rolled the stroller with Rick, his disabled son in marathons 26,2 miles. Eight times he not only rolled it 26,2 miles in a wheelchair, but also dragged his boat 2,4 mi myself sailing at this time, and pedaled 112 miles carrying my son in the seat on the handlebars of his bicycle - all on the same day. Dick also took him on skiing trips, mountain climbing and once drove him in the trailer of his motorcycle across America. Isn't that right, if you take your son to the bowling alley, it will not be at all?

Why am I bullish on Intel

Briefly, without delving into fundamental analysis of Intel stock, although now the assessment from a historical perspective does not look expensive.
We are now on the verge of a new boom in the mobile sphere. Wireless internet speed and bandwidth has grown so much, which allows you to `` surf the Internet" without any frustration. At the same time, not only enjoy text and visual information, but also video. Still 3G for me personally was not enough for complete satisfaction, but the advent of 4G and LTE will do that, what was previously available only to full-fledged computers.
New mobile devices will have such properties, which can already replace laptop functions to a greater extent. New powerful mobile microchips and high-speed wireless standards create a new market.
It seems to me, what will change the perception of Intel as a PC manufacturer( although already changing). Imagine, what did you think before, that Intel will cease to be a growth company since the computer market has reached saturation. But it was not there, technologies are improving and many applications are also migrating to the mobile environment, therefore mobile processors are needed. If a household can have one computer, then there will be at least as many mobile devices in the future, how many family members. These are mobile phones and iPADs And so on, and they will be repeatedly improved.
The sharks of the technical business space understand, where it will smell like blood and try to do everything possible to position yourselfwww.nytimes.com/2010/02/22/technology/22chip.html. 
I don’t doubt it, that Intel will be the winner in the short term. I see no threat. To produce a low cost microchip from the start, not having such a base as Intel, almost impossible.
Intel's latest corporate reports showed, that they did a great job with being overweight" and can maintain high profitability. It should be noted, that during the hot time Intel was bargaining in the area 30 P/E( Internet boom is not considered). And this can lead the assessment of the company easily into 50 Dollars. But I will be conservative and believe, what 30 dollars is quite a fair price for the next 12-18 Months, provided there are no extraordinary events of the type 6 May. If there are such days 5-6, then…….

What Richard KU really wanted to say about “balance sheet recession”

About & quot; Japanese script" development of the US economy (and others like them) everyone heard. Interesting, what's in the concept of 'japanese script" different people include completely different, albeit somewhat correlated ideas. Among the general public, this' scenario" usually means two points: deflation and non-recovery of asset prices (for example stocks). The more advanced ones have a third point. – zero nominal GDP growth. During the discussion (especially in post-Soviet countries) in the subject of & quot; Japanese script" the problem of debt must be added, demographic difficulties in developed countries and, which also happens often – manipulation of the exchange rate.

In general, the topic is wide, and the term & quot; Japanese script" anything is understood.

The second interesting feature is, what's the name of richard koo (author of The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession) became associated with the idea of ​​'Japanese script'" in all its discussed manifestations. Along the way, how communication, and in the course of observing the communication of others, it was discovered that such an idea is attributed to Ku:

`` Japan has a balance sheet recession, the US is now in a balance sheet recession – which means, that in the USA everything will be the same as in Japan ''.

Simplified, but something like that. Therefore, the second thread of the discussion on the topic `` Japanese script" usually goes into evidence why Japan – this is not the USA. And the content of the term balance sheet recession is usually not specified..

The third interesting feature is, that Ku's book itself is absent in translation and free access in principle. Therefore, the vast majority of people formed their ideas about Ku's ideas based on one or two speeches., videos of which are on the network and one or two corresponding presentations. (here And here). As a result, there is a lot of discussion in the style of `` did not read, but I condemn '', and different perception of the content of terms, least.

Since I was lucky enough to read the book itself, I will try to lay out a summary of the main chapters of the book with scanned graphs (the quality is appropriate, Unfortunately).

I'll tell you right away, what The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession – the book is, in principle, crude and acts rather as a training manual for that, what questions to ask, but not an answer to questions. I am very critical of Ku himself., many arguments seem weak to me, some however undeniable. But it's all so to speak – my IMHO and it will not be very useful to you (despite, that the retelling of chapters will be accompanied by some comments in brackets)).

Finally about, as I understand the term "balance sheet recession", which I often abuse. BR – this is a mechanism for reducing GDP through a reduction in aggregate demand caused by a decrease in demand for credit, which is caused by the need to normalize balances. That's all. And whether there will be a decrease in GDP in response depends on other factors, as well as unclear, what will happen to deflation / inflation. Economy – the thing is not one-factor, and NO – this is just one of the processes.

Everything, in the next post, a short retelling of the first chapters titled "The Japanese Recession".

LED TV c 3D

Looked at LED TV with 3D video, must say impressed. It's already a different world. So cool, you are sitting watching football and suddenly some kind of picture pop up in front of your nose. The depth is so clearly visible , as if you are participating in the event. And the effects are better, than in Avatar 3D.
I will need to buy such a TV, as soon as there is more video content for Blue ray. I advise everyone to look at the presentation in specialized salons, amazes.

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